Validation of GHG Statements ISO 14064-3

Table of contents

» Purpose, Scope and Position in the ISO GHG Family

» Key Terms and Concepts

» Principles

» General Requirements for Verification and Validation

» Verification of GHG Statements

» Validation of GHG Statements

» Independent Review and Issuance of Opinion

» Annexes A–D

» Purpose, Scope and Position in the ISO GHG Family

ISO 14064-3 focuses on how GHG statements are checked, not how they are calculated.

• The standard specifies principles, requirements and guidance for verifying and validating GHG statements.

• It applies to:

  • organization GHG inventories (ISO 14064-1),

  • project GHG statements (ISO 14064-2),

  • product carbon footprint statements (ISO 14067).

• It is GHG-programme neutral: if a regulatory or voluntary programme is applicable, its rules apply in addition to ISO 14064-3

Within the ISO 14060 family the document:

• provides the verification / validation process for inventories, projects and product CFPs,

• is complemented by:

  • ISO 14065 (requirements for validation/verification bodies),

  • ISO 14066 (competence of validation/verification teams),

  • ISO 14067 (product CFP quantification),

  • ISO/TR 14069 (application guidance for ISO 14064-1).

» Key Terms and Concepts

The standard defines a structured vocabulary for GHG verification and validation.

Greenhouse gas and inventory-related terms

• Greenhouse gas (GHG) – atmospheric gas (natural or anthropogenic) that absorbs and emits infrared radiation (CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, etc.).

• Global warming potential (GWP) – index comparing the radiative forcing of a unit mass of a GHG to that of CO₂ over a defined time horizon.

• GHG emission / removal factor – coefficient linking activity data to emissions or removals.

• GHG emission / GHG removal / GHG sink / GHG reservoir / GHG storage – terms describing how GHGs are released, removed, stored and moved between reservoirs.

Entities and roles

The standard distinguishes several roles in a GHG engagement:

• Responsible party – person(s) responsible for the GHG statement and supporting information.

• Client – organization or person requesting verification or validation (can be the responsible party or another interested party).

• Intended user – person or organization relying on the GHG information to make decisions (programme administrators, regulators, investors, etc.).

• Verifier – competent and impartial person responsible for performing and reporting on verification.

• Validator – competent and impartial person responsible for performing and reporting on validation.

• Verification/validation team – individuals conducting engagement activities, with a designated team leader.

• Independent reviewer – competent person, not part of the team, who reviews activities and conclusions.

GHG statements, baselines and reductions

• GHG statement – factual, objective declaration that is the subject of verification or validation (e.g. inventory totals, project reductions, product CFP result).

• GHG report – document used to communicate GHG-related information to intended users; it can include one or more GHG statements.

• GHG baseline / baseline scenario / GHG emission reduction / GHG removal enhancement – concepts aligned with ISO 14064-2 and used when the GHG statement includes reductions and removals compared to a reference case.

Verification and validation specifics

• Verification – evaluation of historical data and information to determine whether the GHG statement is materially correct and conforms to defined criteria.

• Validation – evaluation of assumptions, limitations and methods supporting a statement about the outcome of future activities (prospective estimates).

• Engagement – contractual arrangement to perform verification, validation or agreed-upon procedures.

• Level of assurance – degree of confidence in the GHG statement (reasonable or limited for verification).

• Materiality and material misstatement – concepts describing which errors or omissions could influence intended users’ decisions.

The standard makes a clear distinction between historical verification and forward-looking validation, and links both to the concept of assurance on GHG statements.

» Principles

Clause 4 sets out principles that guide all verification and validation work:

• Impartiality – engagements are planned and executed so they are objective and free from bias or conflicts of interest.

• Evidence-based approach – conclusions are based on sufficient, appropriate and reproducible evidence.

• Fair presentation – activities, findings, limitations, obstacles and differing views are presented truthfully.

• Documentation – work is documented so that it provides a clear basis for the conclusion and for demonstrating conformity to criteria.

• Conservativeness – where several options are comparable in completeness and accuracy, the cautiously moderate option is chosen to avoid overstating performance.

» General Requirements for Verification and Validation

Pre-engagement activities

Before accepting or starting an engagement, the verifier/validator must confirm:

• Type of engagement – verification, validation, or (if separately agreed) AUP as described in Annex C.

• Objectives – e.g. accuracy and conformity of the GHG statement (verification) or reasonableness of assumptions and likelihood of future outcomes (validation).

• Criteria – standards, programme rules or internal procedures used as reference (e.g. ISO 14064-1/-2, ISO 14067, GHG programme rules).

• Scope – organizational, project or product boundaries, facilities, processes, covered GHGs, time period, baselines and secondary effects (if applicable).

• Materiality thresholds – qualitative and quantitative thresholds to distinguish material from non-material misstatements.

Team selection and techniques

• A verification/validation team is selected with the necessary skills and competences.

• The standard lists evidence-gathering techniques such as observation, inquiry, analytical testing, confirmation, recalculation, examination, retracing, tracing, control testing, sampling, estimate testing, cross-checking and reconciliation.

Specific requirements during the engagement

Key requirements include:

• Communication of requests for clarification, material misstatements and nonconformities to the responsible party; escalation to the client if necessary.

• Sufficiency of evidence – if essential information cannot be obtained, the verifier/validator must not proceed and must disclaim an opinion.

• Intentional misstatement – suspected intentional misstatement or non-compliance must be communicated to appropriate parties.

• Documented information – the verifier/validator keeps records of engagement terms, plans, evidence, findings, communications, conclusions and independent review.

• Process diagrams – Figures 3 and 4 show the logical steps for verification and validation from planning to opinion and reporting.

» Verification of GHG Statements

Verification deals with historical data for inventories, projects and products.

Planning

The verifier conducts a strategic analysis to understand the organization, project or product and to design verification activities. This includes:

• sector context and nature of operations;

• applicable criteria and regulations;

• materiality thresholds and likely accuracy/completeness of the statement;

• boundaries, emission sources/sinks/reservoirs and changes from prior periods;

• quantification and reporting methods;

• GHG information systems, controls and management oversight;

• results of previous verifications and uncertainty/sensitivity analyses.

A risk assessment identifies inherent, control and detection risks of material misstatement or non-conformity and informs:

• performance materiality,

• focus of evidence-gathering activities,

• need for site visits and depth of testing.

An evidence-gathering plan and a verification plan are prepared, approved by the team leader and updated if scope, timing, procedures or risks change.

Evidence-gathering and site visits

The verifier designs procedures to:

• test data trails and the GHG information system and controls,

• test GHG data and aggregation processes,

• apply analytical testing, control testing, estimate testing and sampling as needed,

• assess ownership and rights to emission reductions and removals.

Site visits are required in specified situations (e.g. initial engagements, significant changes in facilities, material new sites or unexplained changes in emissions). During visits, the verifier reviews:

• operations and processes affecting GHGs,

• infrastructure and measuring equipment,

• monitoring practices, sampling, calculations and assumptions,

• quality control / assurance procedures.

Completion and verification opinion

In completion, the verifier:

• reassesses risks and materiality,

• evaluates sufficiency and appropriateness of evidence,

• evaluates and documents material misstatements and non-conformities with criteria,

• checks whether changes from prior periods are appropriately disclosed.

Then the verifier drafts a verification opinion:

• Unmodified opinion – sufficient appropriate evidence, correct application of criteria and effective controls (where relied upon).

• Modified opinion – GHG statement largely acceptable but with clearly confined issues and no overall material misstatement.

• Adverse opinion – GHG statement is materially misstated or criteria not properly applied.

• Disclaimer of opinion – sufficient appropriate evidence could not be obtained.

A verification report must at least include the title, addressee, responsibilities of responsible party and verifier, description of procedures, opinion, date, location, signature, summary of GHG statement, reference to criteria and scope.

» Validation of GHG Statements

Validation focuses on future GHG-related outcomes and the soundness of assumptions and methods.

Planning

The validator conducts a strategic analysis similar to that for verification, with additional emphasis on:

• prospective nature of the GHG-related activity,

• disclosure of assumptions and methods,

• recognition and eligibility of the activity for the intended user (including geographical or temporal restrictions),

• ownership of future emission reductions or removals,

• boundary setting and baseline scenario,

• secondary effects (leakage),

• quantification methodologies and monitoring design,

• treatment of uncertainty and sensitivities.

The validator:

• sets materiality thresholds for future estimates,

• performs estimate testing (assessing methodology, assumptions and data quality; developing their own estimate or range),

• prepares a validation plan and evidence-gathering plan, approved and updated as necessary.

Execution and completion

Execution covers evaluation of the GHG statement and of its disclosure, leading to:

• assessment of whether assumptions and methods are reasonable and consistent with criteria,

• judgement on whether the stated outcomes are likely under the described conditions.

Completion includes:

• forming a validation opinion (reasonable assurance on the reasonableness of assumptions, limitations and methods),

• preparing a validation report comparable in structure to the verification report but reflecting the forward-looking nature of the subject.

» Independent Review and Issuance of Opinion

• Independent review: verification/validation activities and conclusions are reviewed by a person not involved in planning or execution, to strengthen impartiality and quality.

• Issuance of opinion: the standard describes:

  • opinion types (unmodified, modified, adverse, disclaimer),

  • required contents of the formal written opinion to intended users.

• Facts discovered after verification/validation: procedures are specified for handling new information that may affect the previously issued opinion.

» Annexes

Annex A (normative) – Limited level of assurance verifications

• Sets specific requirements for limited assurance engagements (reduced level of testing and evidence compared with reasonable assurance).

• Explains how evidence-gathering, control testing, treatment of estimates and aggregation of the GHG statement are adapted at limited assurance.

Annex B (informative) – Considerations for verification

• Provides practical guidance on applying principles (especially conservativeness),

• elaborates on risk assessment, materiality, evidence-gathering strategy and interpretation of conservativeness in different contexts (inventories, base years, projects).

Annex C (informative) – Agreed-upon procedures (AUP)

• Describes AUP engagements, which use verification techniques but do not provide assurance or an opinion.

• Intended users define the procedures and accept responsibility for their sufficiency; the verifier only reports factual findings.

• Outlines scope, applications, roles and responsibilities and structure of AUP reports.

Annex D (informative) – Mixed engagement

• Explains mixed engagements that combine verification and validation on the same GHG statement (not applicable to GHG projects).

• Gives examples where historical and future-oriented elements coexist, and where AUP may also be used alongside assurance.

Adaptation Notice under the ISO – International Organization for Standardization

This text has been adapted in accordance with the guidelines set forth by the ISO – International Organization for Standardization. In our efforts to ensure transparency, accountability, and alignment, we have carefully reviewed and incorporated ISO. This adaptation process reflects our commitment to high-quality, accurate, ensuring that the information presented adheres to internationally recognized standards.